LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 76th Regular Session
  
                              April 7, 1999
  
  
          TO:  Honorable Rene Oliveira, Chair, House Committee on Ways &
               Means
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  HB2372 by Gutierrez (relating to exempting certain drugs
               and medicines from the sales tax), As Introduced
  
**************************************************************************
*  Estimated Two-Year Net Impact to General Revenue Related Fundsfor     *
*  HB2372, As Introduced:  negative impact of $(225,921,000) through     *
*  the biennium ending August 31, 2001.                                  *
*                                                                        *
*  The bill would make no appropriation but could provide the legal      *
*  basis for an appropriation of funds to implement the provisions of    *
*  the bill.                                                             *
**************************************************************************
  
General Revenue-Related Funds, Five-Year Impact:
  
          ****************************************************
          *  Fiscal Year  Probable Net Positive/(Negative)   *
          *               Impact to General Revenue Related  *
          *                             Funds                *
          *       2000                        $(99,468,000)  *
          *       2001                        (126,453,000)  *
          *       2002                        (134,295,000)  *
          *       2003                        (142,499,000)  *
          *       2004                        (150,966,000)  *
          ****************************************************
  
All Funds, Five-Year Impact:
  
***************************************************************************
*Fiscal      Probable        Probable        Probable        Probable     *
* Year       Revenue         Revenue         Revenue         Revenue      *
*         Gain/(Loss) to  Gain/(Loss) to  Gain/(Loss) to  Gain/(Loss) to  *
*        General Revenue      Cities         Transit         Counties     *
*              Fund                        Authorities                    *
*              0001                                                       *
*  2000     $(99,468,000)   $(15,614,000)    $(6,131,000)    $(1,891,000) *
*  2001     (126,453,000)    (22,056,000)     (8,661,000)     (2,671,000) *
*  2002     (134,295,000)    (23,424,000)     (9,198,000)     (2,836,000) *
*  2003     (142,499,000)    (24,855,000)     (9,760,000)     (3,010,000) *
*  2004     (150,966,000)    (26,331,000)    (10,340,000)     (3,188,000) *
***************************************************************************
  
Fiscal Analysis
  
The bill would amend the Tax Code to exempt non-prescription medicines
from the sales tax.
  
  
Methodology
  
The fiscal implications of the bill were estimated using data obtained
from the Census Bureau.  Sales of items in Texas were multiplied by the
state sales tax rate, extrapolated through fiscal 2004, and adjusted for
an assumed October 1, 1999 effective date.  The fiscal implications for
units of local government were estimated proportionally. 

Note:  Not included in the fiscal impact of exempting non-prescription
medicines are items that are available without a prescription but that
are not primarily intended for medicinal use.  Such items include
deodorants, hair care products, shaving cream, and other similar
products.
  
  
Local Government Impact
  
Local units of government would have a corresponding fiscal impact from
sales tax revenues, as indicated in the table above.
  
  
Source Agencies:   
LBB Staff:         JK, BB, SM